Suppose the Economy Has a High Level of Unemployment and a Low

Multiple Choice

Suppose the economy has a high level of unemployment and a low level of aggregate output. Which of the following policies could the government implement to alleviate these conditions?

A) a contractionary fiscal policy that increases tax rates
B) an expansionary fiscal policy that increases tax rates
C) a contractionary fiscal policy that increases government purchases
D) automatic fiscal stabilizers
E) an expansionary fiscal policy that increases government purchases